The UK’s economy suffered another crushing blow today when telecoms giant BT announced it was cutting 10,000 jobs, mainly among agency workers and sub-contractors.

Union leaders expressed shock at the scale of the cutback and warned they would resist any moves to make compulsory redundancies.

The company said it had already cut 4,000 jobs, leaving a further 6,000 to go between now and March, adding that it was not planning any compulsory redundancies.

The cuts, part of an on-going efficiency programme, will mainly affect BT’s indirect labour force including agency workers, contractors and offshore staff, including those based in India.

BT said it was reducing its dependence on consultants and contractors, cutting those jobs by 12% whereas direct staff numbers will come down by 4%.

BT, which has a global workforce of 160,000, said it will achieve the reduction in its direct staff largely through natural turnover, pointing out that reductions in previous years have been through voluntary schemes.

Around 90,000 direct jobs are based in the UK whereas contractors and agency workers are spread between this country and other parts of the world.

The jobs announcement came as BT announced an 11% fall in second quarter pre-tax profits to £590 million. Revenues were 4% higher at £5.3 billion.

Ian Livingston, BT’s chief executive, said 7,000 workers left the firm every year so he did not envisage any compulsory redundancies in the latest round of cuts.

The cuts will affect head office functions, support staff and customer services. Mr Livingston said there were now fewer complaints from customers and fewer visits by engineers, so efficiencies could be made.

Asked how long he thought the current economic downturn would last, Mr Livingston replied: “It will get worse before it gets better.”

BT had issued a profits warning, with the Global Services division, which provides IT networks to multinational businesses, blamed for the alert after it failed to deliver anticipated efficiency savings.

The job losses add to a week of gloom on the employment front, with thousands of redundancies announced in recent days and official unemployment edging closer to the politically sensitive two million mark after reaching an 11-year high.

Andy Kerr, deputy general secretary of the Communication Workers Union, said he was shocked at the scale of the job cuts.

“It looks like most of the jobs will be going from the UK. We will be meeting BT as a matter of urgency to discuss the job cuts and we will insist on no compulsory redundancies.”

BT said its pension fund was £600 million in surplus. The company this week unveiled planned changes including an increase in the retirement age from 60 to 65 and higher contributions from workers.

BT said today the changes, being recommended for acceptance by the union, will reduce costs by around £100 million a year and improve the sustainability of the scheme.

The firm reported that revenues were 3% higher in the six months to September 30 at £10.48 billion. As previously warned, the problems at Global Services mean BT expects to see a small decline in underlying earnings for the full year.

BT Retail revenues were maintained at £2.13 billion in the second quarter, helped by a 12% rise in broadband. The company said it remained the UK’s most popular broadband supplier after 69,000 net additions in the second quarter left it with 4.6 million customers.

BT Vision, the company’s recently launched television service, now has 340,000 customers, it added.